NEW YORK/SAN FRANCISCO - Mark Zuckerberg’s inner circle just got smaller. Chris Cox, the Facebook chief executive's long-time lieutenant and chief product officer, is quitting after Zuckerberg last week outlined a new direction for the $470 billion social network. It’s hard to overstate how instrumental Cox has been. His departure is a wake-up call for investors.

Cox helpfully provided his reasons for leaving. In a Facebook post on Thursday that shed more light than a cryptic one-sentence regulatory filing, he wrote the upcoming transition is a “big project” and Facebook will “need leaders who are excited to see the new direction through.” Presumably he isn't one of those.

Other departures in the last year have included Instagram founders Kevin Systrom and Mike Krieger, WhatsApp co-founder Jan Koum, security chief Alex Stamos and veteran policy chief Elliot Schrage.

But even in this parade Cox stands out. He has been with the firm for 13 of its 15 years and he’s arguably just as much an architect of Facebook’s platform as Zuckerberg. Other than Chief Operating Officer Sheryl Sandberg, he is perhaps the most important senior executive.

His exit may suggest Zuckerberg, who controls Facebook with supervoting stock and also serves as its chairman, is consolidating his power as he faces intense scrutiny from regulators around the world, mainly over the company's use of personal data. It should also stamp out any doubts about the seriousness of Zuckerberg’s intent to change Facebook from an open connected platform to a private, encrypted network encompassing its Facebook platform, WhatsApp and Instagram.

That strategy is not, however, compatible with Facebook’s current model, which allows brands to target ads based on consumer data. Nearly all of the company’s $56 billion of revenue comes from advertising. It’s extremely profitable: Facebook’s operating margin is a chunky 45 percent. Pushing ads on private messages is a much harder sell.

Facebook's shares were trading down more than 2 percent on Friday. Something over $10 billion of lost market value may be enough of a reaction to Cox's exit. But it looks too little to allow for the smaller, radically different Facebook Zuckerberg seems to have in mind.

CONTEXT NEWS

- Facebook Chief Product Officer Chris Cox is resigning, he and the company said on March 14.

- The departure follows a new direction outlined on March 6 by founder and Chief Executive Mark Zuckerberg, which will knit together, make private and encrypt all the company’s messaging services. “This will be a big project and we will need leaders who are excited to see the new direction through,” Cox wrote in a Facebook post.

- Cox has been with the company for 13 years.

- Also departing is Chris Daniels, vice president of WhatsApp.

- Facebook shares were down about 2 percent in early trading on March 15.

The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

(Editing by Richard Beales and Martin Langfield)

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